The is an article on the Time of April 9th on Oil. Ot's called "The truth about Oil". Essentially it says that there is plenty of Oil, but cheap oil is finished. We all know that. What is more interesting is that on page 22 it haas a nice table with several sources of Oil, and for each source of Oil the price per barrel:

As you have noticed the price of the ectraction is not expressed in Energy but in dollars.
SO the question is, can we go back and go from the price per dollar to the price in energy? After all we know the price of a barrel of Oil. Supposing that a barrel of oil costs 100$, and a resource facility costs %50 per barrel, we could then assume that that facility has an ENROI of 2:1. Similarly a place that has a cost of 100$ would have an ENROI of 1:1. Would thus be unefficient.

But for this to be true. if we wait until the price of crude oil raises to 200$ a barrel, then we would expect the price of the second facility (the one that use to cost 100$ a barrel) to have risen to 200$ a barrel. But for this to be true we have essentially to have seen ALL prices double in the same time. Essentially this is going to be true if and only if all prices would follow with a relation 1 to 1 the price of crude oil. In other words, if the inflation would follow the first derivative of the oil price. Now, Oil is important in society, so of course we can expect inflation to rise if oil prices rise. But at a 1 to 1? What would this mean. The price of a barrel of Oil has gone from 2005 to now from 20% a barrel to 120$ a barrel. So they have raised of 600%. Have we seen a 6 fold rise of ALL prices in society? No, of course not. We are in a crises, but no where near that bad.

This could be for various reasons. First of all energy in society comes from different sources. Even if one has a peak in costs, it does not automatically follows that all the others do as well. And as such the combined cost of energy in society will be mitigated. Also a lot of the western countries buy oil out of previous agreements. So even if NOW the price is 120$, some of the oil that arrives into European and American shores still arrives at a lower price. (It would be interesting in this to find out a map of which countries have which agreement with whome, for how long, and how much. Is this info available anywhere).
Also there is an effect due to taxes. Oil at the pump costs much more than its natural price (crude+treatment+selling...). This extra comes from taxes. Europe in general has higher taxes than the US. Interestingly the higher the taxes are, the lower will be the perceived raise of the cost of the petrol at the pump.
And then finally there is the bubber band effect that comes from the fact that society is complex, and even if oil rises, it takes some time for the price to percolate through society. Until each object that is being sold is done at a higer price (and thus at a higher cost).

So we can expect that a rise in oil price will rise inflation. Not at a 1:1 ration. But surely at a serious ratio. Something we have not seen so far yet. This without even considering the effect of the printing press.

But of course such rise will not touch everything in the same way. Products that use more petrol will rise in price more. But then also products that do not use any petrol will rise in price because the person that sells them needs to buy petrol based product. Think a 1 hour wage for an unskilled labor. Is he going to get more money? Probably yes, but not as much as the cost of the petrol based objects. Which will rise tension in society. Oops this is already happening.

Thanks mammamia, that was an interesting read. The thing that always worries me is exponentials. The idea had never even crossed my mind until reading Chris' book. The worrying thing is, if petrol prices and thus everything else is on an exponential price curve then at some point (we have no idea when) things will just explode in price very quickly. I'm not sure what would happen at this point. Obviously consumers would stop buying petrol, meaning nobody would get to their jobs, lorries would stop being able to make a living and thus food and goods wouldn't be delivered to the shops. We only have 3 days of food in the shops (this is what separates us from other civilisation collapses, in all other times of history people grew food where they lived) so things would get nasty very quickly ( add on social networking and any sign of shortage would be spread in a matter of minutes, as happened with the recent UK fuel problems, which all happened because one man said ”best to be on the safe side and top up”)

If this was any other product then demand would simply collapse and the price would drop again. For demand to drop for oil (and thus lower the price) lots of people are going to have to be taken out of the equation (death)

I appreciate Chris' outlook as “things will be very different” (it's a very wise outlook because there is no way of really knowing) but really knowing whether the crisis is going to be a John Michael Greer type slow collapse or a Mike Ruppert fast collapse is always on my mind. Currently all signs point to a fast collapse (watch what's happening in Greece)

While the international community is still there then Greece will have some kind of backup in terms of food supply being delivered by international charities/governments. If the collapse went global there would be no such thing. I live in the country side and I am highly aware now that I effectively live in a food desert. There are many sheep (guess where I live) but that's about it.

Can someone actually work out how a slow collapse would take place? Because I can't (not for want of trying)

The only way we would get a slow collapse is if prices rise in a linear fashion . Does anyone really think linear price increase in oil is going to happen?

I don't agree that collapse is the only thing that could happen. People are already using less petrol. Even with price rising exponentially it is still a continuous move. You will not just wake up tomorrow and find the price has risen 100 folds. As people will use less the car, the price will rise less, and even plateau. So I do not believe people will stop using their cars to go to work anytime soon. Nor will lorries stop running. In fact, if the worse come, lorries will be about the only thing that will run. Along with police cars. In Sweden they have already started discussing making Diesel limited for private use (being Diesel the fuel of choise for lorries). People will redefine what is critial and what is unimportant. In fact I expect those two words to come back after having been forgotten for a long time. Taking away the unimportant will slow down the growth of oil price.

Yes, I am looking very closely at Greece (I was planning to go there this summer, now I am not sure if it will still be possible). But Greece is not in such a bad situation. It is still a mediterranean country (albeit semi desertic in some places). Growing food there is not that difficult. In fact an article came out recently on how Greek people have started organising in small coops connected with a farmer.

And an interesting question on the topic is,

which countries will experience a smoother transition to a non oil based society?

So petroleum use is at 1996 levels and the price is still edging up. If there really ever was a recovery then prices would just explode. But a recovery is unlikely. What we are seeing is deflation in all non essential goods and inflation in all essential goods. When they measure the inflation rate overall, it seems half way reasonable. I'd like to see the inflation rate for just Fuel/Energy/Food and see what's going on there. Thats the real inflation rate, the discretionary spending on ipads, computers and holidays is of little importance, because these will begin to shrink more and more with each year (even apple eventually). Again what concerns me is that if the inflation rate on essential services is being under reported we might be closer to an exponetial price explosion than expected. I'm not entirely sure what CM is really predicting to happen. His "things will be different" stance is very clever because anything could happen, and nobody can turn round to him and say "ahhh you see, that didn't happen". I do respect MR for actually having the balls to make some real predictions (even though 50% of the time they are wrong)

So petroleum use is at 1996 levels and the price is still edging up. If there really ever was a recovery then prices would just explode. But a recovery is unlikely. What we are seeing is deflation in all non essential goods and inflation in all essential goods. When they measure the inflation rate overall, it seems half way reasonable. I'd like to see the inflation rate for just Fuel/Energy/Food and see what's going on there. Thats the real inflation rate, the discretionary spending on ipads, computers and holidays is of little importance, because these will begin to shrink more and more with each year (even apple eventually). Again what concerns me is that if the inflation rate on essential services is being under reported we might be closer to an exponetial price explosion than expected. I'm not entirely sure what CM is really predicting to happen. His "things will be different" stance is very clever because anything could happen, and nobody can turn round to him and say "ahhh you see, that didn't happen". I do respect MR for actually having the balls to make some real predictions (even though 50% of the time they are wrong)

When I went and looked up the demand curve I was surprised. Demand destruction is alive and well in America with respect to oil. And yes, if there is a decent recovery the price would go up big time. There is not going to be a decent recovery. How can there be one ? There is an aircraft carrier of data that points to a very dismal future for America. There is going to be a forced reduction in the standard of living. It has already started. It is happening right now all over the county.

Out of control government spending is going to cause some kind of emergency in the not to distant future. The Fed Res is already doing what amounts to constant QE now. QE 1, then QE 2, then operation twist (more QE), and the coming next phases of QE do not bode well for America. We are on the QA train and it has left the station. History shows very well what happens. Currently, the Fed Res is purchasing 61% of the Treasury instruments - 91% of the 20+ year maturity instruments. China and the rest of the world have cut back buying our debt in a substantial way. It is a very serious situation. The world is starting to decide that we are unable to manage ourselves in a responsible manner. This is very serious. The future of USD as the world's reserve currency is at stake. A number of nations have made bi-lateral trade agreements that do not involve USD. The largest and most recent is the China/Japan agreement. Unfortunately, the majority of Americans do not even know that USD is the world reserve currency or what that means or what it will mean if USD looses that status. Most people do not know anything about any of it. When I talk to people I know about this kind of stuff they think I am unbalanced. However, I work for a major Wall Street company and I see stuff every week that looks serious to me. Many people where I work are becoming increasingly concerned. A lot of people are starting preparations for weathering some kind of financial event.

I think CM has done an excellent job of collecting and analyzing the data presented in the Crash Course. Everyone in America should take the course. I think 2 of the E's are going to catch up with us first - Economics and Energy. The environmental E is important but longer term. The intersection of the 2 E's will be painful enough. CM has to be careful what he says. I would be willing to wager that a private conversation with him would be quite enlightening and probably a little scary.

It would indeed be very interesting to measure inflation in essential versus non essential items. Said like this sounds impossible. Who should decide what is essential and what is not?
I now live in an old house in the countryside. When I bought it the previous owner had died in it two years earlier. There was no hot water as it was considered a non essential element. I could only start living in it only after I installed a heater. And still I am happy enough to have my hot showers outside waiting to renovate it all. None of the girls I invited here found this to be acceptable.

The concept of essential changes over time. The way inflation is measured, they use a basket of goods, and see how this basket changes over time. Maybe if there was a website where people could decide which elements to add to the basket it would make this a reality by making baskets using only elements that were here long time ago. Something similar to this but more detailed. Would we find that inflation in past baskets constantly raises more than in subsequent baskets? If this is true there is enough material for an article or two.

I would say, yes. To be without is to invite financial disaster. My wife had an appendectomy last year. That and the treatment for the subsequent abdominal abscess was $115,000.

I am self-employed and my health insurance premiums have shown annual double digit increases for the last five years.We received our new premium billing last week. A 27% increase. I thought it might be related to my wife's expenses last year. I checked with a self -employed friend and found that his premium increased by 25% this year with no claims.

Our premium has more than doubled in the last five years. To insure my wife and myself at age 54 with major medical only and a $7k deductible is now $1200/month. At the rate of increase shown over the past five years, we will be over $2500 in another five. I expect it to be worse.Increasing costs coupled with poor insurance company portfolio returns will compound the necessary premium increases.

Sustainable? Are you kidding. These same premium increases are happening to all municipalities and companies AND THEIR RETIREES.

You're right in saying who would decide what was essential or not. The way I look at it, food, water, shelter and air are necessities to human life. So we can class these as essential. Oil, Gas, Coal, are essential to globalisation (so we can class these as essential to our current way of life) Oil, Gas and to a lesser extent coal are also essential for the production and dispersal of most food, so we can pretty much class these as essential in my opinion.

It's true that we don't have to use fossil fuels for food production (permaculture etc.) but the change over from industrial agriculture to full permaculture would take at least 3-5 years until the permaculture food production was up to the same yield as the industrial agriculture. I know this from experience by the way (allotment). It takes a while for the predators to move in to help keep pest problems down, and in my first year of doing things “the natural way” I lost large portions of my crops. I did think about going back to weed killers and pesticides due to my abject failure, but I stuck it out and now after three years I am getting back to a degree of solid food production. My Soil is alive with worms, beetles, ants, centipedes, spiders etc. and the airspace is filled with every insect under the sun. I look across at other allotments and they a barren of all life.